If the consumer's income and all prices simultaneously double,then the optimum consumption bundle will
A) shift outward relative to the old optimum.
B) move leftward along the old budget constraint.
C) not change.
D) shift inward relative to the old optimum.

Question

Quizplus · Accepted Answer

When both income and prices double, the budget constraint will also double. Therefore, the relative position of the budget constraint remains the same, and the consumer can still consume the same bundle of goods as before. The optimum consumption bundle, therefore, will not change. Therefore, the correct choice is C - not change.

If the Consumer's Income and All Prices Simultaneously Double,then the Optimum